Understanding Liability Insurance
However, with liability insurance, you won’t know the maximum amount of the exposure until AFTER a loss, when you find out how many people were injured or if property was damaged or destroyed. For that reason, logic dictates buying the highest liability coverage limit you can afford.
As stated earlier, many insureds don’t have a clear understanding of how liability insurance works. A common question we get is the following: “If I have a $1,000,000 per occurrence liability coverage limit, and my aircraft crashes with four total passengers on board who are injured or killed, how much does each passenger get from my liability coverage?”
The answer is they don’t get anything… automatically. Think of liability insurance as lawsuit protection. As an aircraft owner, the passengers can certainly sue you for bodily injury, and if you damaged any property during the aircraft accident, those property owners can sue you. Liability insurance protects you, the owner, against those lawsuits. If a settlement offer is made or a judge or jury delivers a verdict against you, the liability coverage will pay those claims up to the limit of your coverage. Keep in mind, if one passenger successfully sues you for $500,000, that leaves $500,000 of coverage limit [using the claim example above] for any other claims of bodily injury or property damage arising from the loss. An important point is that your liability insurance provides legal defense costs in addition to and not as part of your liability coverage limit.
Insurance can be complicated, and you should ask any questions you have about coverage before a loss, not after. If you are ever in doubt about any aspect of your coverage/policy, AssuredPartners Aerospace, AOPA’s partner for Aircraft Insurance can help guide you through the insurance process. Call (800) 622-2672 today to speak with one of our experts or visit www.assuredpartners.com/aviators today to learn more. We look forward to serving all your aviation insurance needs.
